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CIRCULAR

Guiding the implementation of the Prime Minister's Decision no. 74/2005/QD-TTG of april 6, 2005, on the use of proceeds from land use right transfer, sale of workshops and other works when economic organizations have to relocate their head-offices and/or production and business establishments under planning

Pursuant to the Prime Minister's Decision No. 74/2005/QD-TTg of April 6, 2005 on the use of proceeds from land use right transfer, sale of workshops and other works when economic organizations have to relocate their head-offices and/or production and business establishments under planning, the Ministry of Finance hereby guides the implementation thereof as follows:

I. Implementation scope and subjects

1. This Circular guides the use of proceeds from land use right transfer, sale of workshops and other works when economic organizations (state companies, other enterprises operating under the Enterprise Law, the Law on Foreign Investment in Vietnam, the Law on Cooperatives and other economic organizations) which have head-offices and/or production and business establishments to be relocated under planning due to environmental pollution as decided or notified by competent state agencies in accordance with the provisions of Decision No. 74/2005/QD-TTg of the Prime Minister.

2. Economic organizations which have to relocate their head-offices and/or production and business establishments due to environmental pollution not according to planning; units other than economic organizations which have to relocate their head-offices and/or production and business establish-ments due to environmental pollution shall not be subject to this Circular.

II. Land-related financial handling provided for in Article 2 of the Prime Minister's Decision No. 74/2005/QD-TTg; a number of clauses of this Article are guided in detail as follows:

1. Point a of Clause 1 provides for currently used land under the planning on construction of defense, security, national- interest or public-interest works, construction of industrial parks, industrial clusters, hi-tech parks, economic zones, investment projects defined in Articles 36 of the Government's Decree No. 181/2004/ND-CP of October 29, 2004 of the Government on implementation of the Land Law; in cases where the land is assigned by the State with the collection of land use levies and the paid land use levies do not belong to state budget capital or the land being currently used has lawful origin (fully meeting conditions for the grant of land use right certificates and for which the land use levies must not be paid) as defined at Point a, Clause 1, Article 2 of the Prime Minister's Decision No. 74/2005/QD-TTg, when such land is recovered, compensations shall be paid or supports shall be provided in accordance with the provisions of the Government's Decree No. 197/2004/ND-CP of December 3, 2004 on compensations, support and resettlement when the State recovers land.

In cases where economic organizations which currently rent land and pay land rents to the State but the land is assigned by the State with the collection of land use levies and the paid land use levies do not belong to the state budget capital or the currently used land has lawful origin (fully satisfying the conditions for the grant of land use right certificates without having to pay land use levies), when having such land recovered, they shall be compensated and given support in land under the Government Decree No. 197/2004/ND-CP.

In cases where the currently used land has the origin of agricultural land (being transferred, using land of households, individual...) the pecuniary compensations for the economic organization are determined as equal to the land areas multiplying by the agricultural land price at the time of land compen-sation; the difference (between non-agricultural land price and agricultural land price) shall be handled in accordance with Point b, Clause 1, Article 2 of the Prime Minister's Decision No. 74/2005/QD-TTg.

2. Point a of Clause 2 provides for land assigned by the State with the collection of land use levies and the paid land use levies do not belong to state budget capital or the currently used land has lawful origin (satisfying all conditions for the grant of land use right certificates without having to pay the land use levies), when the land use rights are transferred, the proceeds therefrom shall be used in accordance with Article 7 of the Prime Minister's Decision No. 74/2005/QD-TTg.

In cases where the land is being rented and the land rents are paid to the State but the currently used land originates from the land assigned by the State with the collection of land use levies while the paid land use levies do not belong to state budget capital or the currently used land has lawful origin (fully satisfying the conditions for grant of land use right certificates without having to pay the land use levies), when transferring the land use rights, units shall be entitled to use the proceeds therefrom according to the provisions in Article 7 of the Prime Minister's Decision No. 74/2005/QD-TTg.

3. Clause 3 provides that economic organizations may change land use purposes in compati-bility with planning for construction of civil works shall only apply to state-run economic organizations having the functions of doing business in construction of civil works (including residential houses, high-rises, other works for business), having full capability for implementation and other specific conditions prescribed by the People's Committees of provinces or centrally-run cities (particularly Ho Chi Minh City and other localities which are implementing or are permitted by the Prime Minister to implement the Prime Minister's Decision No. 80/2001/QD-TTg of May 24, 2001 on handling and rearrangement of houses and land under the state ownership in Ho Chi Minh City may continue implementing the provisions of Decision No. 80/2001/QD-TTg).

The proceeds from change of land use purposes of economic organizations shall be handled like the case of land use right transfer specified in Clause 2, Article 2, Decision No. 74/2005/QD-TTg of the Prime Minister and guided in Clause 2 of this Section,

4. Regarding the money amounts provided as support for economic organizations other than state companies defined at Point b, Clause 1 and Point b, Clause 2, Article 2 of the Prime Minister's Decision No. 74/2005/QD-TTg, basing themselves on their local situation, the presidents of the provincial-level People's Committees shall decide on the general support levels in the provinces or centrally-run cities, which shall be used as basis for the provincial/municipal Finance Services to determine the specific support amount for each case.

III. The order and procedures for transfer of land use rights, sale of workshops and other works, change of land use purposes provided for in Article 4 of Decision No. 74/2005/QD-TTg of the Prime Minister are concretely guided as follows:

Economic organizations whose head-offices and/or production and business establishments must be relocated shall base themselves on the land use plannings approved by competent authorities under the current provisions of land law, on the relocation decisions (notices) of competent state agencies:

1. To contact functional agencies in localities for search of new places for relocation of their head-offices and/or production and business establish-ments under planning and relocation regulations of the provincial-level People's Committees.

2. To propose in writing the provincial/municipal Services of Natural Resources and Environment, Services of Planning and Architecture (Services of Construction) of localities to determine the land use planning of the land plots being currently used by the organizations.

After receiving the written proposals of economic organizations, the provincial-municipal Services of Natural Resources and Environment, Services of Planning and Architecture (Services of Construction) must give their written opinions on the planning on the use of the land premises of the economic organizations whose head-offices and/or production and business establishments must be relocated.

3. To work out plans, schemes on relocations, schemes on handling of to be-relocated buildings and land: Basing on the land use plannings approved by competent state agencies, economic organiza-tions shall file written proposals enclosed with schemes on handling of to be-relocated buildings and land: selling workshops or other works, transferring the land use rights or changing land use purposes for execution of investment projects on construction of civil works for business purposes if fully satisfying the conditions defined in Clause 3, Section II of this Circular.

The above relocation plans, schemes, the handling schemes and the written proposals shall be addressed to managing ministries, branches or state corporations set up under the Prime Minister's decisions and the Finance Ministry (for state-run economic organizations managed by the central government; to the managing provincial/municipal Services, Boards or branches, the provincial/municipal Services of Finance, the People's Committees of urban districts, rural districts, provincial capitals or towns (hereinafter referred to as the district-level People's Committees) where exist the to be- relocated head-offices and/or production and business establishments of state-run economic organizations managed by the localities and economic organizations other than state companies.

4. The dossiers on buildings and land, enclosed with relocation plans and schemes, handling schemes, written proposals on handling of to be-relocated buildings and establishments shall include:

- Papers proving the origin of the house ownership, the land use rights. In cases where there are no papers on land and/or workshops, there must be the district-level People's Committees' certification of the process of land use and the dispute-free land being currently used.

- The plan on current land ground as provided for by functional agencies.

- The written opinions of the provincial/municipal Services of Natural Resources and Environment, Services of Planning and Architecture ( Services of Construction) on the land use planning of localities where exist the to be-relocated head-offices and/or production and business establishments.

5. After receiving the relocation plans, schemes, handling schemes, written proposals of economic organizations and the enclosed dossiers:

- Ministers, heads of ministerial-level agencies, Government-attached agencies, central bodies of mass organizations, and chairmen of the Managing Boards of state corporations set up under the Prime Minister's decisions shall consider and approve the relocation plans or schemes; handling schemes of economic organizations under their respective management.

- Provincial/municipal Services, departments, branches, and district-level People's Committees shall give their written opinions to the Finance Services for the latter to report thereon to the provincial-level People's Committees for considering and approving the relocation plans or schemes, handling schemes of every economic organization under their respective management.

IV. Competence to sell workshops, other construction works attached to land, to transfer the land use rights as provided for in Article 5 of the Prime Minister's Decision No. 74/2005/QD-TTg; a number of clauses of this Article are specifically guided as follows:

1. The sale of workshops and/or other constructions attached to land, the transfer of land use rights of state companies (state-run economic organizations) as provided for in Clause 1 shall be decided by owners' representatives in accordance with the provisions of the law on state enterprises as follows:

a/ Ministers, heads of ministerial-level agencies, Government-attached agencies and central bodies of mass organizations, and chairmen of the Managing Boards of state corporations set up under the Prime Minister's decisions shall decide on the sale of workshops and/or constructions attached to land and/or the transfer of land use rights of state companies (state-run economic organizations) under their respective management after obtaining the opinions of the Finance Minister.

b/ Provincial-level People's Committee presidents shall decide on the sale of buildings, workshops and/or constructions attached to land and/or the transfer of land use rights of state companies (state-run economic organizations) under their respective local management.

2. The sale of buildings, workshops and/or other constructions attached to land and/or the transfer of the land use rights of economic organizations other than state-run economic organizations, as provided for in Clause 2, shall be carried out as follows:

a/ The economic organizations currently using the land assigned by the State with the collection of land use levies which do not belong to state budget capital or the land with lawful origins of households or individuals (that do not have to pay the land use levies when being granted land use right certificates) shall decide by themselves on the transfer of land use rights, the change of land use purposes under planning and/or the sale of buildings, workshops and other constructions according to provisions of law.

b/ For economic organizations using the land leased by the State, the land assigned by the State without the collection of land use levies or assigned with the collection of land use levies but entitled to land use levy exemption, other cases not specified in Clause 1 and Point a, Clause 2 of this Section, the land use right transfer shall be decided by provincial-level People's Committee presidents. In cases where the economic organizations' buildings, workshops and/or other works built on the land, the provincial-level People's Committees shall handle them by either of the following two modes:

- Letting the economic organizations decide by themselves on the sale thereof, after obtaining the opinions of provincial-level People's Committees.

- Provincial-level People's Committees shall negotiate with the economic organizations for the purchase of the latter's assets on land at the local market prices; then auction them together with the land use rights.

V. Modes of selling buildings, workshops, other constructions attached to land, as provided for in Article 6 of the Prime Minister's Decision No. 74/2005/QD-TTg, are guided in detail as follows:

1. Point a, Clause 1 on auction: State companies, when moving to new places, must auction their buildings, workshops, other constructions and auction the rights to use the land being used by the to be- relocated establishments; the determination of the reserve prices of buildings, workshops, other constructions and/or land use rights shall comply with the provisions of law on auction of property, auction of land use rights. Persons competent to approve the auction results shall be the persons competent to decide on the sale of buildings, workshops, other constructions and/or the transfer of land use rights, provided for in Clause 1, Section IV of this Circular.

2. For cases provided for in Clause 2 where the competent state agencies permit the change of land use purposes, the sale of buildings, workshops or other constructions, the transfer of land use rights in form of designated sale, the prices of building, workshops, the prices of land use right transfer, the prices of land subject to use purpose change must be close to the actual market prices of sold buildings, work-shops, of land use right transfer at the time of sale.

After obtaining the decisions of competent authorities approving the sale of buildings, workshops and/or other constructions, the transfer of land use rights, the change of land use purposes, economic organizations must organize the pricing of land, buildings, workshops and/or other constructions. The pricing of buildings, workshops, other constructions or land must be conducted through state organizations having the function of pricing, appraised and submitted by provincial/municipal Services of Finance to provincial-level People's Committee presidents for approval.

VI. The management and use of proceeds specified in Article 7 of the Prime Minister's Decision No. 74/2005/AD-TTg are guided in detail as follows:

1. Basing themselves on the proceeds from the sale of buildings, workshops and/or other constructions, the transfer of land use rights, the change of land use purposes, the land compensation or support money, the land-attached property compensation or support money, economic organizations shall have to clearly define the value of the land use rights, the value of the buildings, workshops and/or other constructions against the total proceeds and report thereon to the managing ministries or branches, state corporations and concurrently to the Ministry of Finance (provincial/municipal Services of Finance). The valuation of land use rights and assets on land must be based on value structures (in percentage %) of each kind of asset already determined in the total value of the buildings, land of the establishments under decisions (approvals) of competent agencies defined in Section IV of this Circular; in cases where the buildings and land are recovered by the State, the land compensation or support money and the property compensation or support money shall comply with the plannings approved by competent authorities. In the reports to their respective managing ministries, branches or state corporations and concurrently to the Finance Ministry, they must determine:

- The land use levies, the land use right transfer money, the proceeds from sale of buildings, workshops and/or other constructions, the land compensation money, the property compensation money,... which belong to the economic organizations' capital.

- The land use levies, the land use right transfer money, the proceeds from sale of buildings, workshops and/or other constructions, the land support money, the property support money, which belong to state budget capital.

2. Basing themselves on reports of economic organizations; the provisions of law on compensation, support and resettlement; the regulations on the use of proceeds from land use right transfer, sale of buildings, workshops and/or other constructions when economic organizations must be relocated under planning as provided for in Decision No. 74/2005/QD-TTg, the finance agencies of the same level shall have to determine:

a/ The proceeds belonging to capital of economic organizations as provided for at Point a, Clause 1 of Article 2, Point a, Clause 2 of Article 2, Point a, Clause 1 of Article 3, and the relocation expenses defined at Point a, Clause 1, Article 7 of the Prime Minister's Decision No. 74/2005/QD/TTg, specifically including:

- The cost of investment in land with sources of state capital, which has been assigned to organizations but not yet recovered (if any); the cost of investment in land with money not belonging to state budget capital;

- Value of property, land use levies, land use right transfer money, land use purpose change money, compensation and/or support money, which are assigned by the State to economic organizations as capital or created by economic organizations with money not belonging to state budget capital;

- The actual relocation expenses not exceeding the approved norms; in case of absence of such norms, the actual local market prices shall apply;

- Expenses related to the sale of buildings, workshops and/or other constructions, the land use right transfer, the land use purpose change, including expenses for house and land measuring and drawing, expenses for house sale, for land use right transfer (expenses for price determination and appraisal, expenses for organization of auctions and other related expenses).

b/ The support money enjoyed by state companies, state-run economic organizations shall be used in accordance with the provisions of Point b of Clause 1, Point b of Clause 2, Clause 3 of Article 2, Point b, Clause 1 of Article 3 of Decision No. 74/2005/QD-TTg; this is the budget capital invested in state-run economic organizations; the support money enjoyed by economic organizations not run by the state, specified at Point b, Clause 1 and Point b, Clause 2, Article 2 of Decision No. 74/2005/QD-TTg of the Prime Minister.

c) The remaining amounts (if any) shall be remitted into the state budget according to the current provisions of law on state budget decentralization.

VII. The order and procedures for remittance, allocation of proceeds from house sale, land use right transfer, land use purpose change, land support money, property support money:

1. The proceeds from sale of buildings, workshops and/or other constructions, the proceeds from land use right transfer, land use purpose change, land support money, property support money, after subtracting the amounts belonging to the economic organizations' capital as provided for at Point a, Clause 2 and the amount remittable into the state budget as provided for at Point c, Clause 2, Section VI of this Circular, shall be the state capital invested in, or provided as support for, the economic organi-zations, which must fully remitted into the custody accounts at the provincial-level State Treasuries, owned by owners' representatives (managing ministries, branches, state corporations), for state-run economic organizations managed by the central government; or owned by provincial/municipal Services of Finance (for the remaining economic organizations) and must be monitored in detail to each of the to be- relocated economic organizations.

2. The allocation of money from custody accounts at provincial/municipal State Treasuries shall be carried out as follows:

2.1. For state-run economic organizations:

a/ Basing him/herself on the proposal dossiers of ministries, ministerial-level agencies, central bodies of mass organizations, state corporations set up under the Prime Minister's decisions (for state-run economic organizations managed by the central government); the provincial/municipal Services, Departments, district-level People's Committees, state corporations set up under decisions of provincial-level People's Committees (for state-run economic organizations under local management), the Finance Minister (directors of Finance Services) shall consider and decide on the allocation of money from custody accounts to economic organizations according to investment projects approved by competent authorities.

The dossiers enclosed with the written proposals of units shall serve as a basis for the Finance Ministry (Finance Services) to decide on money allocation, including:

- A decision of the competent authority permitting the sale of buildings, workshops and/or other constructions, the transfer of land use rights, the change of land use purpose.

- A decision of the competent authority approving the investment project according to the current regulations on investment and construction management.

- The provincial-level State Treasury's certification of the money amounts already deposited into the custody account.

b/ Ministers, heads of ministerial-level agencies, Government-attached agencies and central bodies of mass organizations, and chairmen of Managing Boards of corporations set up under decisions of the Prime Minister (directors of provincial/municipal Services, Departments, branches, presidents of district-level People's Committees, chairmen of Managing Boards of corporations set up under decisions of provincial-level People's Committees) shall allocate investment capital under decisions approved by competent authorities (specified at Point a of this Clause) and addressed to economic organizations, State Treasuries and finance agencies of the same level.

2.2. For economic organizations other than state-run economic organizations, the directors of provincial/municipal Services of Finance shall decide on the allocation in three installments according to the progress of investment in production and business establishments of the units at new locations. In cases where the support money amount is below VND 1 (one) billion, it can be fully allocated in lump sum to economic organizations; and at the same time record the state budget revenues and expenditures.

3. Provincial/municipal State Treasuries shall effect the allocation of money from the custody accounts according to the current regulations on management, allocation and settlement of capital construction investments. The total amount allocated to each project shall not exceed the amount approved in the decision of the Finance Minister (director of the Finance Service); the remainder after the settlement of investment project (if any) must be remitted into the state budget.

4. Accounting of budget revenues and expenditures regarding the money in custody accounts at provincial/municipal State Treasuries:

4.1. The accounting of state budget revenues and expenditures shall be effected according to the principles: the recorded revenues and expenditures do not balance into the mutual ceasing of budgetary resources, but only the recorded revenues and expenditures reflected through state budget shall be accounted for the management of assets invested from state budget sources; only the surplus amounts payable into the state budget shall be balanced into state budget revenues.

4.2. Implementation order:

a/ Annually, upon the expiry of the investment capital settlement time limit (January 31 of the following year), the provincial/municipal State Treasuries shall make detailed reports on every unit (under every decision of competent authority) according to the contents: the reallocated amount; the amount already settled in the budget year; the amount already paid progressively; the advance amount not yet recovered. Such reports shall be addressed to the Finance Ministry, for centrally-managed units, to provincial/municipal Finance Services, for locally-managed units, before February 20 of the following year for carrying out procedures for mutual ceasing corresponding to the capital amounts meeting conditions for payment into the state budget according to regulations. The finance agencies shall carry out procedures for recording revenues and expenditures into the budget; send one copy of the voucher to the State Treasury managing the custody account; one copy to the managing agency which shall have to notify the attached economic organization thereof.

- Regarding the accounting of items, subitems according to the state budget contents:

+ Accounting revenues into Item 067 (property sale), corresponding subitem.

+ Accounting expenditures: when making expenditures, basing on content of expenditures to account into the prescribed items, subitems.

- Regarding the accounting of chapters: The money amounts allocated under decisions to economic organizations, which belong to the central budget shall be accounted into Chapter of ministries, central agencies allocated with capital; for local economic organizations under local management, they shall be accounted into the corresponding Chapter of provincial/municipal Services, Departments, branches....

For the remaining amounts payable into the state budget, they shall be accounted into Chapter B grade (provincial, municipal budgets) corresponding to the Chapter of ministries, central agencies; if Chapter B grade has no corresponding Chapter, they shall be accounted into Chapter 150B.

- Regarding the regulation between budget levels, it shall comply with the principle that: units managed by any level, such budget level shall effect the mutual ceasing, specifically:

+ The capital amounts allocated to centrally-managed economic organizations shall be entered as revenues by the central budget and regulated 100% for the central budget.

+ The capital amounts allocated to locally-managed economic organizations shall be entered as revenues by the local budgets and regulated 100% for the local budgets.

+ The amounts payable into the budget shall be regulated 100% to the local budgets.

b/ Upon completion of project investment, economic organizations shall make reports on work completion settlement for sending to their managing agencies. The managing agencies shall examine and compare vouchers forwarded by finance agencies in order to consider and approve the settlement of completed works according to the prescribed regimes; if the amounts payable to the State Treasuries are larger than the approved settled amounts, the economic organizations must immediately make remittance into the state budget according to the provisions of this Circular.

VIII. Implementation provisions:

This Circular takes effect 15 days after its publication in "CONG BAO." If any problems arise in the course of implementation, the ministries, branches and localities are requested to promptly report them to the Finance Ministry for guidance.